Credello: How Much Does Missing Student Loan Payments Hurt Your Credit Score?

If you're missing student loan payments, your credit score could be taking a hit. Here's how much that matters and what you can do about it.

What is your credit score?

Your credit score is a number that lenders use to assess the risk of lending money to you. It affects your chances for any sort of borrowing, including opening a credit card or getting approved for a personal loan for college students. The higher your score, the lower the risk.

Lenders use one of three reporting bureaus to pull your credit report: Experian, TransUnion, or Equifax. Each bureau decides which model it uses to determine your total score, either FICO®, which has a range of 300 - 850, or VantageScore®, which has a range of 501 - 990.

There are six factors that affect your credit score, with each weighted a little differently depending on the scoring model:

1. Amount of on-time payments. In all reporting models, the amount of late payments you have is the most significant factor that affects your credit score. Any payment later than 30 days is counted as a missed payment and can ding your score.

2. Length of credit history. The longer your credit history, the better.

3. Credit utilization (the percentage of credit used). This measures how much of your total available credit you're using.

4. New credit applications. Approved applications count as positive factors, but rejected applications boomerang and can hurt your score if reported to the bureau.

5. Inquiries about credit products. When you allow a potential lender to look at your credit score, an inquiry is made. Lenders consider this when deciding whether to approve you for a product, as multiple inquiries make it seem like you're desperate for money. However, only "hard" inquiries affect your score. "Soft" inquiries, such as the pulls made through credit monitoring apps or budgeting software, aren't counted.

6. Type of credit. The mix of credit accounts you have includes car loans, student loans, credit cards, etc.

How can late student loan payments affect your credit score?

In both credit scoring models, the amount of late payments you have is the most significant factor that affects your credit score. Missing student loan payments can lower your credit score by anywhere from 30 to 50 points, depending on the bureau. That means you may have a harder time getting a loan or being approved for one.

What can you do if you miss your loan due date?

If you're having trouble making your student loan payments, there are a few things you can do to try and get back on track. First, talk to your lender about what options are available to you. They may be able to extend the deadline for repayment, change the terms of the loan, or offer other solutions.

Second, consider looking into other sources of financial help. There are often ways to get help with debt without having to pay it back straight away, such as through credit counseling services or debt reduction programs.

Finally, be honest with yourself about what you can realistically afford to pay each month. Sometimes it's helpful to make a plan and track your progress over time so you can see how your situation is changing and keep your lender informed so that adjustments can be made that ensure you're never hurting your score or missing payment deadlines again.

The bottom line

Missing student loan payments can hurt your credit score. But there are ways to prevent this from happening and get back on track with your finances.